Ominous warnings about Medicare Advantage plans have sounded for more than a year now.
Health insurers say federal funding cuts to these privately run versions of Medicare will force them to whack plan benefits, hike premiums or leave some geographic markets entirely as they continue to fight rising health care costs. The government is paring back the money it provides for this coverage as part of its effort to fund the health care overhaul, which aims to cover millions of uninsured people.
Plan changes are starting to crystallize for Medicare Advantage customers who are about a month into the annual open enrollment window in which they can search for new coverage. Benefits experts say patients are seeing fewer plan choices this year, and more are losing doctors from their insurance coverage networks. Open enrollment lasts until Dec. 7, and many customers wait until the final weeks to pick a plan.
Here are some important points to consider if you're still shopping.
1. Expect fewer plan choices
The total number of Medicare Advantage plans offered next year will slip more than 5 percent to 2,522 from 2,664, according to the market analysis firm Avalere Health.
How much that matters to you will depend greatly on where you live and the coverage that you have. Avalere says most counties across the country will see some decrease in the number of plans available, with those in the South and Midwest generally seeing more.
Some preferred provider organization, or PPO, plans are more vulnerable to funding cuts because they feature large networks of doctors or care providers. That expense can squeeze profitability for insurers.
If your plan was among the ones being scrapped for next year, you should have received a cancellation notice prior to Oct. 1.
2. Check on your doctor
The nation's biggest provider of Medicare Advantage plans, UnitedHealth Group Inc., expects to trim the number of doctors in its network nationally by 10 percent to 15 percent by the end of next year. The insurer declined to say how many doctors are in that network. It provides Medicare Advantage coverage for more than 2.9 million people
UnitedHealth has been restructuring its Medicare Advantage business since 2010 to absorb rate reductions, said Jack Larsen, CEO of the insurer's Medicare and retirement business. It has already worked on things like cost cutting and fraud prevention.
"This is one more step in what has been a number of steps to keep these plans affordable over a number of years," he said, adding that the doctor cuts will focus mainly on specialists, not primary care.
Regardless of whether your insurer has announced physician cuts, it pays to double check that the doctors you see will still be in your plan's network. The costs for care sought outside an insurer's network can be much higher.
3. Scrutinize details
Insurers are pushing to make the premiums they charge attractive and affordable even as they absorb the funding cuts. That means they may skimp on some benefits or charge you more for a hospital stay, so don't swoon if you see a particularly low premium.
"It's more important this year than ever that people look below the surface," said Ross Blair, a senior vice president for eHealthMedicare.com, a division of eHealth Inc.
Plans usually cut extra benefits like dental or vision coverage first when they look to control premium growth, said Eric Maddux, director of Medicare services for eHealthMedicare. Then they may start raising the patient's cost sharing responsibilities.
That means a patient may have to pay $300 per day for the first several days of a hospital stay instead of $250. It also may mean bigger co-payments at the doctor's office, a higher deductible or larger annual out-of-pocket maximum.
Blair said the average cap for out-of-pocket expenses has climbed to about $4,800 this year from $4,400.
Aside from the payment terms, look for the star rating that the government has attached to plans as a way to judge quality. Plans are rated from poor to excellent on a one to five scale. Five-star plans have a gold star icon affixed to their name in the plan finder at www.medicare.gov .
4. What it all means
Medicare Advantage enrollment has continued to grow despite funding concerns. A total of 14.4 million people are enrolled in these plans this year, which represents an increase of nearly 10 percent from 2012, according to the nonprofit Kaiser Family Foundation, which studies health care issues.
Enrollment in the plans has actually increased by 30 percent from 11.1 million customers since 2010, the year the president signed the health care overhaul into law. Medicare Advantage plans now cover about 28 percent of the population enrolled in Medicare.
However, Kaiser also noted that funding cuts to the plans have not been fully phased in, and bonus payments the government has doled out to insurers have partially offset the cuts that have been made.
It remains to be seen whether the reductions will stunt future growth.